Assessing the Market and the Competition for a New Product or Service

1. Assessing the Market and the Competition for a New Product or Service • Presented to UCI Graduate School of Management Center for Entrepreneurship and Innovation • January 14, 2014 • Andy Mindlin • REALWORLD Marketing, Inc. • andy@REALWORLDmarketing.com • TEL +1 714-377-6312

2. Assessing the Market and the Competition for a New Product or Service

3. About the Speaker 30years experience in Marketing;Emphasis on Startups and New Products Core Experience • Procter & Gamble (Brand Management) • BA in International Economics, Vanderbilt University, Phi Beta Kappa Recent Experience • Co-founded fabless semiconductor company • Served as Vice President of Marketing & Sales • Raised $13 million in venture capital Current Activities Include • Helping business leaders solve marketing problems • Serving on corporate Boards • Mentoring students at UC Irvine Paul Merage School of Business • Judging UC Irvine annual Business Plan Competition

4. Quick Questions • In the Business School? • Taken business classes? • Started a business before? • Anything particular you want to learn tonight?

5. What We’ll Cover As advertised • How to Assess the Market • How to Assess the Competition Plus • Nomenclature • Examples • “9 Questions every business plan should answer” • “How the Judges Will Assess Your Business Idea” • Your questions

6. Why it’s Important “What’s wrong with most business plans? (They) waste too much time on numbers and devote too little to the information that really matters.” • “If you want to speak the language of investors, base your business plan on… the four interdependent factors critical to every new venture:” • William A. Sahlman • Harvard Business Review • July-August 1997, p. 98 • Based on research of over 100 startups and their original business plans The People The Opportunity The Context Risk and Reward

7. Situation Analysis • Have a new product idea • Potential seems strong • Need money to build it • Other next steps not certain

8. Start at Ground Zero • Look at some fundamentals • “Basic blocking and tackling” • In marketing, translates as: • Know who your customers are • Listen to them • Consider alternate “paths to market”

9. Where We Want to Go Idea Sales, Funding, Management Support

10. Alternate Paths to Market Idea Typical Technology Path Prototype Patent ??? ??? Sales, Funding, Management Support

11. Alternate Paths to Market Idea Market Oriented Path Typical Technology Path Customers Prototype Profit Patent Principle ??? ??? Sales, Funding, Management Support

12. Marketing (defined) Going to the market To learn what prospects will buy, then creating & delivering that product... when, where and how they want it Our Company The Market OUTSIDE IN

13. Why do Companies Fail? “The company had fallen into the classic trap of building a product it thought customers ought to like – instead of what our customers wanted to buy.” • Why Successful • Companies Fail • By John J. Cullinane Based on the history of Cullinet Software, Inc., the first software company to be listed on the New York Stock Exchange, and reach $1 billion dollars in valuation. It got caught in the rapid technological changes of the 80s, resulting in a sale to Computer Associates for $400 million.

14. Keys to Success in Marketing • Know who your customers are • Listen to them The rest is execution.

15. Now Today’s Goal is in Sharper Focus • It’s not just“assess the market” and“assess the competition” • This is a criticalsuccess factor towards“getting what we want”

16. Assessing the Market

17. Three Key Questions Precede Research • What do we want to learn? • What will we do with the information? • How can we gather the information?

18. What do we Mean by “The Market?” A market is people exchanging goods & services(for value) Key to an investor, because this is where customers part with their money • One of two key transactions investors care about “The market” can be described as consisting of 3 components • Customers • Competitors • Dominant Trends (that affect us all)

19. What do we Mean by “The Market?” Customers Answer the key questions (“5 W’s and 1 H”) • Who are they? • What are they? • Where are they? • When do they buy? • Why do they buy? • How much do they buy? (How much? How often?) Consider both the “many” and the “few” Investor needs to know:“Who is going to give you money for what you propose to do?”

20. What do we Mean by “The Market?” Competitors • Who are the major players? • Who are the newcomers? • Who’s probably working on the same thing? We’ll discuss more on “Competition” later Investor needs to know:“Who else is after these same dollars?”

21. What do we Mean by “The Market?” Trends Answer the key questions • Size? • Direction? • Growth? • News? • Regulatory? • Financial? • Needs (Pain)? Investor needs to:Gauge the “attractiveness” of this market

22. How do we Gather This Information? Starting with General Information • Market AnalystsGartner/Dataquest, Forrester Research, Yankee Group [Fee, but may pity students] • StockbrokersMerrill Lynch, Goldman Sachs, E*TRADE, Schwab • Web Google www.google.com[Go ahead, enter a question] About www.about.com[Like asking a web librarian] Hoovers www.hoovers.com Mantawww.manta.com Inc. Business Resources www.inc.com Bizstatswww.bizstats.com Yahoo! Finance finance.yahoo.com[Find a public company in the same space and read reports on their market] • Government Economic Indicators www.commerce.gov Census, Demographics www.census.gov Edgar Database www.sec.gov/edgar.shtml • [You’re paying for it, use it; • but take care to avoid settling for “numbers”]

23. How do we Gather This Information? Getting Specific Information • Ask prospects • Pump your network • Ask your coach, mentor and angel for suggestionsIf you don’t have several, find and adopt them • The specific answers are usually out thereFor almost every market there’s a • Market research report • Industry analyst • Industry (trade) magazine • Trade association • Trade show • Ask a librarian (degrees in Information!)

24. “3 Degrees of Separation” How to Connect With Anybody on the Planet • It no longer takes even "Six Degrees of Separation” 7,140,502,093 World Population = Source: US Bureau of the Census • http://www.census.gov/population/popclockworld.html • Jan 14, 2014 Number of People You Can Connect to Degrees of Separation Qty People You Know 1926 1926 1 People They Know 1926 3,708,109 2 People They Know 1926 7,140,502,093 3 is based on this principle (www.LinkedIn.com)

25. If the Market isn’t There yet Gauge the opportunity somehow “What was the market for bottled water before Perrier?” • Who knew? • And the “% of homes dissatisfiedwith the taste of their water” But you could have quantified the:Market for “liquid refreshment”

26. If the Market isn’t There yet Gauge the opportunity somehow “What was the market for overnight delivery before Federal Express?” • Who knew? • Also could get testimonial quotesfrom responsible people whohave the problem But you could have quantified the:Business spending on urgent communications

27. If the Market isn’t There yet Gauge the opportunity somehow “No one ever asked us to design aMini-Van” • Who knew? • Again, testimonial quotes from responsible people who have the problem would add support But you could have quantified the:“# of moms with kids” and“% dissatisfied with station wagons”

28. Market vs. Target Market Market • The set of all actualand potential buyersof a productor service Target Market • That group of peoplepre-disposed to buying

29. Market vs. Target Market Market

30. Market vs. Target Market Market • Target MarketFocusing on peoplepre-disposed to buying

31. Target Market (Example) • Get specific • Telegraph that your sales force knows exactly where to aim

32. Charlie’s New Business Success Factors • Pick a BIG market • SEGMENT it • EXECUTE better than anybody • Arnold O. Beckman • Founder of Beckman Instruments, Beckman Coulter • Inventor of accurate and easy-to-use scientific instruments that revolutionized the study and understanding of human biology

33. Market Segmentation Dividing a market into distinct and meaningful groups of buyers… who might merit separate productsand (or) marketing mixes (4 P’s)

34. What to do With the Information • Not just: • “Gather information” • “Report” • “Deliver a plan” • Goal is to PERSUADE

35. How do we Show What we Learned? • Following are a few examples of“Assessing the Market” • Likes? Dislikes?

36. IC Market Make-up Today

37. SiRiFIC’s Addressable Market

38. Competitors by Segment Property Management Real Property Help Desk Facilities IT Assets Maintenance Fixed Assets Fleet/Vehicles

39. Assessing the Market – Guidelines • Be curious • Ask a lot of questions • Be resourceful • Let it be an indicator of how you’ll solve the problems that come up in your business • “China Morning Post” • Recognize that professional investors know more than you do • So you can never know enough about your market

40. Remember the Keys to Success • Know who your customers are • Listen to them The rest is execution.

41. Listening to Customers (2009 BPC) • Surveyed 2009 BPC participants • 64% interviewed prospective customers; 36% did not • Of THOSE WHO DID • 94% said it was valuable (67% said “very valuable”) • 80% were surprised at what they learned • Of TEAMS THAT WON AN AWARD(1st, 2nd, 3rd, 4th) • 100% listened to customers • 100% said it was “valuable” • 90% were “surprised” by what they learned • n=33

42. Benefits of “Listening” • “You get a third party perspective on your product, providing feedback & request for things you may have overlooked” • “Getting actual testimonials from customers for the pitch; • Understanding what is important to customers and focus on it • Get a reality check of the market and its state to accept the product or not” • “Know what they really want and don’t want” • “We got to verify our secondary research” • “Validated or debunked certain assumptions” • “Identifying opportunities to make our business idea more unique and competitive.” • “It gives an understanding of the customers' needs” • “Learned price point of our product” • “Understanding our markets and where we would be most effective” • “Face to face interaction” • “Being able to refine and fine-tune the product” • “Got a better understanding of the costumer needs and helped update our business model accordingly”

43. Why Teams Didn’t Listen to Customers

44. Why Teams Didn’t Listen to Customers

45. Tips for “Listening to Customers” • Decompress(not selling anything) • Write out your introduction & questions in advance • Appeal to their sense of helpfulness (ask for "help") • Understand that people generallylike new ideas...and they've beenin your shoes • Respect their time(set and declare a time limit) • #1...get referred in(Charlie Baecker suggested I call you)

46. Assessing the Competition

47. Three Key Questions Precede Research • What do we want to learn? • What will we do with the information? • How can we gather the information?

48. Your Approach is a Key Issue Not recommended • “We have no competition” • “There is nothing like this” Alternatives to Consider • Who does this exactly? • Who does something somewhat like this? • How is this problem solved currently (and by whom?) • Who else is competing for the same (budget) dollars?

49. Your Biggest Competitors Will Include • Doing Nothing (DN) [Leaving the money in their wallet] • Home brewed (DIY) [“Boss, we can build that”] Recognize this in your plans • The key isn’t just to gather information and “report”… • But to make a PERSUASIVE case That you can get people to part with their money (instead of giving to others, or keeping it to themselves)

50. How do we Identify the Competitors? Be a customer • Online • Ask around Ask the customers • “How do you solve this problem currently?” • “Who are their competitors?” • “Who else (have you heard) is working on this?” [Get on Google or About and look for someone to solve the problem] • [Find a trade journal and call the editor, asking “who does this?”]